SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
March 9, 1998
ORANGE AND ROCKLAND UTILITIES, INC.
(Exact name of Registrant as specified in its charter)
Incorporated in New York 1-4315 13-1727729
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification
Incorporation) Number)
One Blue Hill Plaza, Pearl River, New York 10965
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (914)352-6000
Items 1.-4. Not Applicable.
Item 5. Other Events
On March 9, 1998, three alleged shareholders of the
Company filed a purported derivative action on behalf
of the Company against its directors, several current
officers and one former officer (the "O&R Defendants"),
Arthur Andersen LLP and two individuals identified in
the Complaint as members of Andersen (collectively the
"Andersen Defendants") and nominally against the
Company. Plaintiffs filed the action, entitled
Virgilio Ciullo, et al. v. Orange and Rockland
Utilities, Inc., et al., in the Supreme Court of the
State of New York, County of New York. The Complaint
essentially claims that the various defendants breached
their obligations to the Company and their disclosure
obligations and wasted corporate assets related to:
(1) the Company's investigation of wrongdoing following
the arrest of a former officer (and other events) which
occurred in 1993; (2) the decision by the New York
Public Service Commission ("NYPSC") to reduce the
amount of certain storm-related costs for which the
Company sought deferral and recovery; (3) the decision
to divest the Company's generating assets through an
auction and subsequent decision not to reserve the
right to submit a bid for the plants in such an
auction; (4) losses incurred as a result of the winding-
up of the business of NORSTAR Energy Limited
Partnership; and (5) the retention of Arthur Andersen
LLP both as independent auditors and, allegedly, in
connection with the development of a Customer
Information Management System ("CIMS").
Plaintiffs seek various forms of relief related to
these claims, including: (1) compensatory damages in
excess of $40 million and the approximate sums of
$1.758 million and $15 million on various counts;
(2) an order directing the Company to conduct an
"appropriate analysis" of its decision to divest the
generating assets through an auction and subsequent
decision not to reserve the right to submit a bid;
(3) a direction to the Board of Directors to retain the
proceeds from the auction in safe investments until the
shareholders have voted on how the proceeds are to be
used; (4) a direction to the Board of Directors to
submit to shareholders not less than three alternative
plans for the use of the proceeds, including:
(a) distribution through a dividend; (b) the buy-back
of stock; and (c) the use of the funds within the
Company's operations; (5) an accounting of 1996
earnings, impression of a trust on the assets of the
O&R Defendants and corrective disclosures setting forth
the "true earnings and losses" of the Company; (6) an
accounting of the amounts paid to Arthur Andersen LLP
for the CIMS contract, re-payment of any amounts in
excess of "the reasonable value of CIMS" by Arthur
Andersen LLP and an officer of the Company and the
removal of Arthur Andersen LLP as the Company's
independent auditors; (7) indemnification by the O&R
Defendants to the Company for the Company's alleged
damages; (8) orders to prevent the recurrence of the
alleged wrongdoing; and (9) attorneys' fees. The
Complaint also asserts claims against the Andersen
Defendants.
On March 30, 1998, the O&R Defendants and the Company
filed a motion to dismiss the case. The grounds for
the motion to dismiss are two-fold: first, plaintiffs'
failure to make a demand on the Board of Directors to
commence the action as required by New York Business
Corporation Law 626(c), and second, failure to state
a claim: (1) against the directors in light of a
provision of the Company's Certificate of
Incorporation, approved by the Board of Directors and
adopted by the shareholders in 1988, which in
accordance with New York Business Corporation
Law 402(b) shields directors from personal liability
to the Company or its shareholders for damages for
breach of duty (with certain exceptions, e.g., bad
faith, intentional misconduct, committing a knowing
violation of the law or personally gaining a financial
profit or other advantage to which the directors were
not legally entitled); and (2) against the O&R
Defendants and the Company for failure to state a claim
for relief with the requisite particularity and in
light of the protections afforded by the "business
judgment" rule.
Item 6. Not Applicable.
Item 7. Not Applicable
Item 8. Not Applicable.
Item 9. Not Applicable.
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
ORANGE AND ROCKLAND UTILITIES, INC.
By: /s/Robert J. McBennett
Robert J. McBennett, Treasurer
Dated: March 31, 1998
